Sharing High Growth Across Generations: Pensions and Demographic Transition in China

Zheng Song (zsong@fudan.edu.cn), Kjetil Storesletten, Yikai Wang and Fabrizio Zilibotti

No 1, UBSCENTER - Working Papers from UBS International Center of Economics in Society - Department of Economics - University of Zurich

Abstract: Intergenerational inequality and old-age poverty are salient issues in contemporary China. China’s aging population threatens the fiscal sustainability of its pension system, a key vehicle for intergenerational redistribution. We analyze the positive and normative effects of alternative pension reforms, using a dynamic general equi- librium model that incorporates population dynamics and productivity growth. Although a reform is necessary, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations. High wage growth is key for these results.

Keywords: China; Credit market imperfections; Demographic transition; Economic growth; Fully funded system; Inequality; Intergenerational redistribution; Labor supply; Migration; Pensions; Poverty; Rural-urban reallocation; Total fertility rate; Wage growth (search for similar items in EconPapers)
JEL-codes: E21 E24 G23 H55 J11 J13 O43 R23 (search for similar items in EconPapers)
Date: 2012-11
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Related works:
Journal Article: Sharing High Growth across Generations: Pensions and Demographic Transition in China (2015)
Working Paper: Sharing High Growth Across Generations: Pensions and Demographic Transition in China (2012)
Working Paper: Sharing high growth across generations:pensions and demographic transition in China (2012)
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